Nonprofit Mergers Around the Nation: Are They Really a Trend?

Print Share on LinkedIn More

August 2, 2011; Source: The Free Press | The United Way operations in Mankato and St. Peter are merging. The head of the Greater Mankato Area United Way explained, “Mergers are a nationwide trend. Nonprofits are operating on shoestring budgets and this will help save costs.” Although United Ways are rarely living off of shoestrings, is it true that a merger trend is actually trending? There have been a bunch of recent merger announcements in the press recently:

  • Two Northeast Ohio organizations that provide computer support to local school systems are merging to become the “largest information technology center in Ohio,” serving 200,000 K–12 students, teachers, and administrators. The subtext of the news item is that the combined organizations can translate their school support skills into providing technological services for local governments and businesses.
  • In Rhode Island, two venerable home health care providers —Home & Hospice Care of Rhode Island, the nation’s second hospice ever (founded in 1976) and the Visiting Nurse Service of Greater Rhode Island (which dates back to 1908)—are creating a joint parent company, even though HHC and VNS will continue to operate under their own names. The rationale here seems to be related to impending national health care insurance changes. According to the Providence Journal, “By joining together, they expect to be better able to adapt to changes in reimbursement policies and the federal health-care overhaul.”
  • In Sacramento, two homeless youth organizations—Diogenes Youth Services and Wind Youth Services—are combining to operate as Wind Youth Services, to offer enhanced services through a streamlined operation, but also to save on administrative costs, such as by having one executive director instead of two.
  • Two human services organizations in Portland, Maine, are merging, but their concerns are about dealing with the still-troubled economy. People’s Regional Opportunity Program and Youth Alternatives Ingraham will start a yearlong merger process in October. YI is a mental health services provider, while PROP largely operates federally funded programs such as Head Start, fuel assistance, and WIC, and both are concerned about the flow of state and federal funds going forward.

Trend?  It is hard to say. But the diversity of reasons—from saving money to grabbing new business opportunities—suggests that nonprofit mergers are not a one-size-fits-all dynamic affecting only troubled shoestring agencies.—Rick Cohen

  • Molly Greenman

    We have been hearing for years that there are “too many nonprofits” and calls from some funders and nonprofit leaders for mergers. Yet, I don’t sense that there has been a significant uptick in mergers. Our organization completed a successful merger in January after a number of “failed” attempts over 10 years. I really don’t see the other attempts as failures – like any “marriage,” it can be hard to find the right partner.

    Further, despite calls for consolidation, new non profits continue to proliferate. As long as there are unmet needs in communities, and people with the passion to address them, nonproftis will sprout. In the for profit world, it’s called entrepreneurship.

  • Tom McLaughlin

    The reason it’s ‘hard to say’ that mergers are a trend is because nonprofits don’t have to register their mergers the way publicly-held companies do. But as a nonprofit merger and alliance consultant I can tell you anecdotally that there is a definite trend these days. Plus, Rick’s point that there is no single motivation for exploring mergers is correct.

    Final point — nonprofit mergers don’t generally lead to systematic job loss. Witness a Boston-area merger of two homeless service providers — the smaller of the two organizations was quoted publicly that this was true of their merger.